Self-Employed Tax Return Guide for Tradespeople

Filing a self-assessment tax return is one of those annual tasks that most self-employed tradespeople dread. It does not have to be complicated, but it does need to be done right. Getting it wrong can mean paying too much tax, or worse, penalties from HMRC for late or incorrect returns.

This guide walks you through the entire process, from registering with HMRC to submitting your return, including the expenses you can claim, the deadlines you need to hit, and the common mistakes to avoid.

Who Needs to File a Self-Assessment?

If you are self-employed (sole trader) and your income exceeds 1,000 pounds per year, you need to file a self-assessment tax return. This applies to virtually all self-employed tradespeople. Even if you also have employment income (PAYE), you still need to file if you have self-employed earnings above the threshold.

Key Deadlines

5 October: Register with HMRC for self-assessment (if you are newly self-employed, do this within 3 months of starting)
31 October: Deadline for paper tax returns
31 January: Deadline for online tax returns AND payment of any tax owed
31 July: Second payment on account due

Miss the 31 January deadline and you will receive an automatic 100-pound penalty, even if you owe no tax. After 3 months late, daily penalties of 10 pounds per day (up to 900 pounds) apply. After 6 months, a further 300 pounds or 5 percent of tax due (whichever is greater). Do not miss these deadlines.

What Income to Report

Report ALL your self-employed income for the tax year (6 April to 5 April). This includes:

• Income from all customers and contractors
• Cash payments (yes, all of them)
• Income from trade directories and lead platforms
• Any other business income (selling old tools, scrap materials, etc.)

If you work under CIS, include your gross income (before CIS deductions). You will claim the CIS deductions back separately on the return.

Expenses You Can Claim

This is where most tradespeople either claim too little (paying more tax than they need to) or claim things they should not (risking an HMRC enquiry). Here is what you can legitimately claim:

Vehicle costs

You have two options: actual costs or simplified mileage. Actual costs: fuel, insurance, repairs, servicing, MOT, road tax, finance interest (not the capital repayment), parking. Claim the business-use percentage (if your van is 80 percent business use, claim 80 percent of costs). Simplified mileage: 45p per mile for the first 10,000 miles, 25p per mile after that. Keep a mileage log. The simplified method is often better for tradespeople who do a lot of miles.

Tools and equipment

All tools, power tools, PPE, workwear, and equipment purchased for business use. Items costing over 1,000 may need to be claimed as capital allowances rather than expensed in full.

Materials

Any materials you purchase for jobs (even if you pass the cost on to customers as part of your quote).

Insurance

Public liability, employers liability, professional indemnity, tool insurance, and the business portion of your van insurance. See our insurance guide.

Professional fees

Accountant fees, trade body memberships (FMB, NICEIC, NAPIT, etc.), CSCS card renewal, Gas Safe registration, training courses directly related to your trade.

Phone and internet

Business portion of your phone bill and internet if you use them for work (typically 50 to 75 percent of the total).

Office and admin

Stationery, printer ink, computer or tablet used for business, software subscriptions (accounting software, QuoteSmith, etc.).

Use of home as office

If you do admin from home, claim a proportion of household bills (heating, electricity, council tax, mortgage interest or rent). HMRC's simplified method allows you to claim a flat rate based on hours worked at home: 10 pounds per month for 25 to 50 hours, 18 per month for 51 to 100 hours, 26 per month for 101+ hours.

CIS Deductions

If you have had CIS tax deducted from your payments by contractors, these deductions are claimed on your self-assessment return. They reduce your tax bill pound for pound. If your CIS deductions exceed your tax liability, you will receive a refund. Keep all your CIS payment and deduction statements as evidence. Read our CIS guide for full details.

Payments on Account

If your tax bill exceeds 1,000 pounds, HMRC will require payments on account. These are advance payments towards next year's tax, each worth 50 percent of your current year's bill. They are due on 31 January and 31 July. This means your first self-assessment payment can be painful: you pay the current year's tax PLUS 50 percent on account for next year.

Plan for this. Set aside 25 to 30 percent of every payment you receive into a separate savings account for tax. This ensures you always have the money when the bills arrive.

Filing Your Return

Do it yourself

HMRC's online self-assessment system is reasonably straightforward. If your affairs are simple (sole trader, no employees, no complicated investments), you can file it yourself. The system calculates your tax automatically based on the figures you enter.

Use an accountant

An accountant typically charges 300 to 800 per year for a sole trader's accounts and tax return. The good ones will save you more than their fee through legitimate tax planning and ensuring you claim every expense. They also deal with HMRC if there are any queries. For most tradespeople earning over 30,000, using an accountant is worthwhile.

Record Keeping Requirements

HMRC requires you to keep records of all income and expenses for at least 5 years after the 31 January submission deadline for the relevant tax year. This includes invoices, receipts, bank statements, CIS statements, and mileage records. Digital records are acceptable. Use accounting software to keep everything organised.

Frequently Asked Questions

When do I need to register for self-assessment?

Register with HMRC by 5 October following the end of the tax year in which you became self-employed. If you started work in June 2025, register by 5 October 2025. You can register earlier and it is sensible to do so.

What happens if I miss the deadline?

An automatic 100-pound penalty for filing late, regardless of whether you owe tax. After 3 months, daily penalties of 10 pounds per day. After 6 months, a further 5 percent penalty on tax due. After 12 months, even higher penalties. File on time.

Can I claim for clothes and shoes?

Only if they are specifically for work and not suitable for everyday wear. Steel-toe boots, hi-vis vests, and branded work uniforms are claimable. Jeans and trainers that you also wear at weekends are not.

How much tax will I pay?

In 2026/27, the personal allowance is 12,570 (no tax). Income between 12,571 and 50,270 is taxed at 20 percent. Income between 50,271 and 125,140 is taxed at 40 percent. You also pay Class 2 and Class 4 National Insurance. A typical sole trader earning 40,000 profit pays approximately 6,500 to 7,500 in total tax and NI.